IFRS Foundation releases new guidance on sustainability disclosures

The IFRS Foundation has recently published guidance aimed at enhancing transparency and consistency in sustainability reporting, focusing on climate-related transition plans and jurisdictional adoption of IFRS Sustainability Disclosure Standards (S1 and S2).

Background

In 2023, the International Sustainability Standards Board (ISSB) introduced its first two IFRS Sustainability Disclosure Standards:

• IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information

• IFRS S2: Climate-related Disclosures

These standards provide a global baseline for organizations to report on material sustainability risks and opportunities, including climate-related impacts on business strategy and value creation.

To support effective implementation, the IFRS Foundation has released guidance for reporting entities and jurisdictional authorities. This includes jurisdictional profiles for countries adopting IFRS SDS and guidance on disclosures about transition plans.

Guidance on climate-related transition disclosures

Observations of inconsistent disclosures on climate transition plans prompted the ISSB to issue detailed guidance. This aims to help organizations report in a way that aligns with IFRS S2 while reflecting their unique sustainability strategies.

Key points of the guidance include:

• Clarifying Climate-Related Transitions: Explaining what constitutes a transition plan and the steps involved in moving towards a lower-carbon or climate-resilient economy

• Information for Entities With Existing Transition Strategies: Guidance on what should be disclosed when an organization already has a sustainability or climate strategy

• Enhanced Reporting on Material Risks and Opportunities: Providing more granular instruction on how to describe climate-related actions, targets, and measures

It is important to note that IFRS S2 does not mandate the creation of a transition plan, but organizations may need to disclose transition-related information when it is material to their operations or stakeholders. This guidance ensures that such disclosures are clear, comparable, and decision-useful.

Jurisdictional profiles

To support global adoption of IFRS SDS and provide transparency to stakeholders, the IFRS Foundation has developed jurisdictional profiles and snapshots:

• Jurisdictional Profiles: Provide detailed insights into countries that have finalized their approach to adopting or using IFRS SDS. Profiles include targets for alignment, current sustainability-related reporting requirements, and adoption status. To explore the full list of profiles, click here.

• Jurisdictional Snapshots: Offer high-level overviews for jurisdictions that are finalizing or in progress with their regulatory frameworks. Snapshots serve as a preliminary guide and may differ from final profiles. To view the snapshots, click here.

Together, profiles and snapshots offer a comprehensive view of global progress, enabling organizations to benchmark practices, prepare for regulatory changes, and enhance reporting quality.

Atrium forte perspective

At Atrium Forte, we see these updates as an opportunity for organizations to strengthen transparency, improve stakeholder trust, and align with international best practices.

• Start Early: Assess your sustainability reporting processes against IFRS S1 and S2 requirements

• Be Strategic: Integrate climate transition and sustainability disclosures into corporate strategy

• Stay Informed: Monitor jurisdictional profiles and snapshots to ensure alignment with evolving regulations

By leveraging IFRS SDS guidance, organizations can turn compliance into a strategic advantage, showcasing leadership in sustainability while providing material, decision-useful information to investors and stakeholders.